COVID-19 vaccination levels, at least in the developed world, have now reached levels where many devastated industries are starting to rebuild.
One of those sectors is international education.
“While international students await for clearer signs of Australian borders reopening, recent developments suggest an improving outlook into 2022,” said portfolio managers Matthew Haupt, Catriona Burns and Oscar Oberg in a memo to clients.
“We believe the market is underestimating IDP Education’s ability to capitalise on the recovery in the global education sector and drive market share gains, underpinning strong earnings growth over the medium term.”
IDP is in the business of placing international students into education institutions in Australia, as well as the US, the UK, Canada, New Zealand and Ireland. The Melbourne organisation also made a major acquisition in India back in July.
The company also distributes and administers International English Language Testing System (IELTS) tests.
“IDP Education is a co-owner of IELTS with the British Council and Cambridge Assessment,” read the Wilson memo.
Shares for IDP have already gained nearly 80% this year so far, and more than 50% since the start of July.
But the Wilson trio reckons they are far from a peak yet.
IDP’s very upbeat trading update this week
Haupt, Burns and Oberg were especially impressed with the company’s update presented at its annual general meeting on Tuesday.
They noted that, as international borders rapidly reopen, IDP’s international student placement business has already seen a 120% year-on-year increase in those heading to the northern hemisphere.
“The company provided a positive first quarter FY2022 trading update at its annual general meeting, noting a strong recovery across its global network, with IELTS testing volumes increasing by 84% compared to the prior year,” the Wilson memo read.
“Over the past 5 years, the company has invested substantially in research and development, and is now in the early stages of monetising an industry-leading digital platform, disrupting the traditional student placement model.”
The Wilson team is not the only one bullish on IDP. Last week Morgan Stanley upgraded its price target to $40.20 while keeping it at “overweight” status.
IDP shares closed Thursday at $37.12, giving it a market capitalisation of more than $10.3 billion.